International activities responsible for cooking gas price slash – Marketers

Former President, Nigeria Liquefied Petroleum Gas Association, NLPGA, Nuhu Yakubu, has attributed the decrease in the retail price of cooking gas in the country to the fall in price of the product at the international market.

Mr Yakubu said this in an interview with the News Agency of Nigeria on Thursday in Lagos, against the backdrop of reduction in price of Liquefied Petroleum Gas, LPG, in Nigeria.

According to the U.S. Energy Information Administration, the current price of natural gas dropped by 76.1 per cent to 2.10 per one million dollars British Thermal Units (BTU) on May 31 from 8.78 per one million dollars BTU.

Mr Yakubu said that the price of LPG dropped because the international reference price in USD had dropped, amidst relatively stable Naira exchange rate.

“So, the ripple effect is being felt locally in retail pump price reduction.

“Current price of LPG depends on location, as you know it’s operating in a deregulated market.

“However price is averaging at N730 per kilogram or N417 per litre,” he said.

Mr Yakubu, also Group Chief Executive Officer, Banner Gas Ltd., said that government had no role in LPG pricing, except to levy taxes on the product.

He said: “So, government can only help with reducing taxes.

“Government can also help address the issues challenging gas supply as feedstock to major LPG producers like NLNG.

According to him, it will enable increased production of LPG and domestic supply.

“With improved domestic supply comes better retail pump pricing.”

Oladapo Olatunbosun, the President, Nigerian Association of Liquefied Petroleum Gas Marketers, NALPGAM, said that the reduction in price of LPG was a commendable effort.

Mr Olatunbosun said that the association was monitoring the development; watching the decline in market price while believing it would continue.

“All our assessment and recommendations are reserved till when we have a full cabinet of the new government,” he said.

A NAN correspondent, who monitored cooking gas prices at the retail market, gathered that the cost of cooking gas had reduced by 15 per cent.

Between April and May, the price of refilling a 12.5kg cylinder of Liquefied Petroleum Gas (cooking gas) has reduced between 12 per cent and 10 per cent on the back of lower crude oil prices and a decline in international gas prices.

NAN survey in Lagos indicated that the price of cooking gas is trending downwards to N8,700 currently from N10,500 in April and May.

Chinedu Okonkwo, a gas retailer at Somolu, Lagos, said that the price fell from N850 per kg by April 30, to N700 and N750, but that still sold at N900 per kg at other local gas retailers in the area.

He said that the development ease some of the burden on cash-strapped households, who had been dealing with a hike in the price of the commodity since January 2022 coupled with surge in petrol prices as a result of subsidy removal.

Okonkwo said that LPG was an international commodity with about 65 per cent of domestic gas coming from imported sources.

Sekinat Lawal, a gas retailer at Ikeja, said that gas prices in the country were linked to an international benchmark called Mont Belvieu, which had been on the downward slope for the last couple of months.

She said that Mont Belvieu was the site of the largest underground storage facility for liquefied petroleum gas in U.S.

“The U.S. LPG market pricing indicator is driven primarily by the Mont Belvieu market and reported daily by the U.S. Energy Administration” she said.

Mr Lawal said that imported gas prices were declining and therefore reflected at the local market.

Another retailer, Francis Evans, Managing Director, Floppy Oil and Gas, said crude oil prices typically influence domestic LPG prices in the international market, adding that as the price of crude oil rise, LPG prices often follow suit.

“The currency exchange rate is another factor, as importers require dollars to import LPG.

“The rise in the cost of local and international shipping and the surge in demand for LPG during a cold winter are also factors affecting the price of LPG,” he said.

“The United States of America and Argentina are the major suppliers of gas to Nigeria.

“But the Russia-Ukraine war, which started in February last year, triggered a surge in gas prices in these countries, especially the U.S.

But recently, the prices have been falling,” he said.

(NAN)